Unnamed sources have told Autocar that the Stuttgart-based car maker is debating vigorously at board level plans for such a car.
The new TT-rival will be based on the next-generation of the company's transverse-engine front-wheel drive MFA architecture. The current platform underpins the A-Class, GLA SUV, CLA sedan and B-Class, and will also be found underneath the upcoming Infiniti Q30 hatch and QX30 soft-roader.
Should the coupe gain approval from the Daimler board, sales won't begin until 2019 at the earliest, about a year after the next-generation A-Class hatchback heads into showrooms.
As with the A-Class, GLA and CLA, the small coupe range will be spearheaded by an all-wheel drive AMG model powered by a heavily-boosted 2.0-litre four-cylinder engine. In the current generation of cars, this motor produces 265kW of power and 450Nm of torque.
The British publication believes that in its next-generation guise, the 2.0-litre turbocharged engine could deliver almost 300kW of power. Lesser variants will feature significantly less power and have front-wheel drive as standard.
If given the go-ahead, the new coupe will take many styling cues from the larger, rear-wheel drive Mercedes-AMG GT coupe (above).
Given the car's sporty intent, the coupe will likely feature a 2+2 seating layout. Boot space will reportedly be around the 350 litre mark, with practicality aided by a large rear liftback.
A convertible variant is also on the cards.